XAU/USD on the Rise: Gold Nears Record High, Fed's Stance in Focus

XAU/USD

Prediction: Increase

Gold prices continue their strong upward momentum, currently hovering near the all-time high of $2,956.15, set in the previous session. However, profit-taking pressure may lead to short-term corrections before the uptrend resumes. Investors should closely watch price reactions at key support levels to assess the likelihood of continued growth.

FUNDAMENTAL ANALYSIS

1. Monetary Policy & Fed Impact

The Fed maintains a cautious stance, closely monitoring inflation and the labor market. Investors expect the Fed to respond "strongly and systematically" to inflation developments, according to a report from the San Francisco Fed.

U.S. Treasury yields have declined, with the 10-year yield dropping to 4.4016%, reducing the appeal of the USD and supporting gold prices. The PCE data on Friday – the Fed’s preferred inflation gauge – will be a key factor influencing monetary policy outlook and gold prices.

2. Inflation & Market Drivers

Former President Trump reaffirmed that tariffs on imports from Canada and Mexico will take effect as planned on March 4, raising concerns about inflation.

The gold rally is primarily driven by safe-haven demand, as markets fear a potential global trade war due to U.S. tariff policies.

The USD Index has edged down slightly to 106.49, providing additional support for gold prices.

3. Geopolitics & Market Sentiment

U.S.-EU tensions are rising as Trump and Macron hold opposing views on the Ukraine war, potentially increasing economic uncertainty.

India’s gold imports plunged 85% in February, the lowest in 20 years, as record-high gold prices dampened demand.

Gold remains on an uptrend in 2025, up 13% YTD and 5.39% in February.

TECHNICAL ANALYSIS

Key Resistance Levels

● $2,956.505: Recent all-time high; a breakout could push prices toward the $2,970 - $2,980 range.

● $2,950: Critical resistance zone; failure to break above this level may trigger a short-term correction.

Key Support Levels

● $2,930.121: Closest support level, aligning with the 34-EMA; staying above this level will reinforce the uptrend.

● $2,906.715: Next support level; losing this level may lead to a pullback toward $2,884.912.

● $2,850.545: Strong support zone, crucial for monitoring buying interest.

Technical Indicators:

RSI: 56.96 – Still in the bullish zone, but not yet in the overbought territory (70), indicating strong momentum with the possibility of a short-term pullback.

Trading volume remains high, signaling strong investor interest in gold.

Gold is trading near its all-time high with a strong uptrend, though short-term profit-taking could cause temporary pullbacks. Investors should monitor key support levels and the PCE data on Friday to adjust their trading strategies accordingly.

 

 

 

 

 

 

 

 

 

 

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